This invention relates to crossing markets. A crossing market or “crossing” is a designated time that buyers and sellers meet to transact on a given issue of a traded bond or to trade a pre-determined tradeable instrument. The traders or dealers present at the crossing insure the liquidity of the instrument being traded. The customers provide the volume of the trade.
Large institutional customers seek liquidity when trading securities. Liquidity allows the institutional customers to trade large volumes of instruments—e.g., fixed-income securities or other tradeable securities. Typically, the institutional customers obtain more favorable conditions for large blocks of instruments to be traded when the market volume is high. Nevertheless, customers do not make the large market; dealers and traders do. Therefore, crossings, which include numerous dealers and traders as well as large numbers of customers, satisfy the need to seek added liquidity without requiring dealer and trader participation in the trades by combining the markets of individual dealers and traders. Furthermore, crossings efficiently funnel liquidity into pre-determined packets of time and equilibrium—i.e., generally accepted—price levels. Because the institutional customers know prior to the crossing which securities will be traded, they realize that they can benefit from the added liquidity provided by the other dealers, traders and institutional customers without having to make the market themselves.
Dealers and traders also benefit from supporting crossings because the dealers and traders have an opportunity to increase their exposure to additional customers and, if designed properly, the crossing provides the respective customers of the dealers and traders with advantageous pricing conditions.
Thus, crossings provide highly efficient markets for trading of tradeable securities.
It would be desirable to provide further benefits to dealers, traders and customers to encourage participation in a crossing.